Unit 11 Exam

When is an offer considered to be accepted? A) When the broker notifies the buyer that the seller has accepted the offer B) One business day after the offer is accepted and signed by the seller C) When the buyer gives a signed receipt to the broker to show the buyer has received the acceptance D) The moment the seller accepts the buyer's offer

A) When the broker notifies the buyer that the seller has accepted the offer

In a preprinted sales contract, several words were crossed out or inserted by the parties. To eliminate future controversy as to whether the changes were made before or after the contract was signed, the usual procedure is to A) have both parties initial or sign in the margin near each change. B) have each party write a letter to the other approving the changes. C) write a letter to each party listing the changes. D) redraw the entire contract.

A) have both parties initial or sign in the margin near each change.

Under an installment contract, the legal title to the property is held by A) the vendor. B) the vendee. C) the trustor. D) the trustee. Explanation

A) the vendor.

Under a land contract, the buyer is called A) the trustor. B) the vendor. C) the vendee. D) the beneficiary.

C) the vendee.

A buyer makes an offer on a house, and the seller accepts in writing. What is the current status of this relationship? A) The buyer and seller have an implied, unilateral executory contract. B) The buyer and seller have an express, bilateral executory contract. C) The buyer and seller do not have a valid contract until the seller delivers title at closing. D) The buyer and seller have an express, bilateral executed contract.

B) The buyer and seller have an express, bilateral executory contract.

Which of these is NOT typically a factor in determining the amount of the earnest money deposit? A) Whether it is an amount sufficient to discourage the buyer from defaulting B) Whether it is an amount sufficient to cover the broker fees C) Whether it is an amount sufficient to cover any expenses the seller might incur if the buyer defaults D) Whether it is an amount sufficient to compensate the seller for taking the property off the market

B) Whether it is an amount sufficient to cover the broker fees

A real estate buyer takes over the seller's loan that originated in 2005. The lender releases the seller of liability and substitutes the buyer as the party primarily liable for the mortgage debt. This type of transaction is A) a subordination of loan. B) a novation. C) never allowed. D) a non-qualifying assumption.

B) a novation.

A contract is said to be bilateral if A) only one party to the agreement is bound to act. B) both parties to the contract exchange binding promises. C) one of the parties is a minor. D) the contract has yet to be fully performed.

B) both parties to the contract exchange binding promises.

In a land contract, the vendee A) does not pay interest and principal. B) has possession during the term of the contract. C) is not responsible for the real estate taxes on the property. D) obtains legal title at closing.

B) has possession during the term of the contract.

A buyer who owns the property in equity has A) an option contract. B) a liquidated damages contract. C) a lease. D) an executory contract.

D) an executory contract.

While suffering from a mental illness that caused delusions, hallucinations, and loss of memory, a person signed a contract to purchase real estate. Which statement regarding the contract to purchase is TRUE? A) The contract lacks consent. B) The contract is void. C) The contract is voidable. D) The contract is fully valid and enforceable.

C) The contract is voidable.

Should the buyer default, an example of liquidated damages to the seller in a purchase contract could be A) damages for the taking of private land for public use. B) a court action for specific performance. C) forfeiture of the earnest money deposit. D) recovery of money lost as a result of the breach.

C) forfeiture of the earnest money deposit.

A contract is said to be executed when it includes A) the consideration. B) the competent parties. C) the signatures of the parties. D) the offer and acceptance.

C) the signatures of the parties.

Mutual agreement to the terms of a real estate contract is indicated by A) default remedies. B) acknowledgment. C) signatures. D) offer and acceptance.

D) offer and acceptance.

An inspection contingency in a real estate sales contract provides that A) the seller must have the property inspected and a report issued to the buyer, at the seller's expense. B) the buyer has the option of having the specified inspection(s) performed or cancelling the contract. C) the seller must obtain a property inspection report before an offer to purchase is made. D) the buyer may obtain certain inspections of the property, at the buyer's expense.

D) the buyer may obtain certain inspections of the property, at the buyer's expense.

Express means...

intentions were announced in writing

Executory means the sale has...

not yet closed

If a buyer defaults on a purchase agreement and the seller keeps the buyer's earnest money, which of the following remedies has the seller elected? A) Liquidated damages B) Partial performance C) Rescission D) Money damages

A) Liquidated damages

If the parties change their original promises by executing an amendment and then decide they want to make a change to the closing date A) they should write this change in Paragraph 11, Special Provisions. B) they can do so as long as both parties agree to the change. C) there is nothing they can do; the amendment has already been filled out. D) the broker must rewrite the contract form after all the changes so that there is a neat and clearly understood contract form.

B) they can do so as long as both parties agree to the change.

A contract that is entered into by a person who is under the age of contractual capacity is A) unenforceable. B) voidable. C) void. D) valid.

B) voidable.

All of the following are essential elements of a contract EXCEPT A) mutual agreement. B) words of conveyance. C) lawful objective. D) consideration.

B) words of conveyance.

The buyer of real estate takes possession but not legal title to property under A) an option. B) a purchase money mortgage. C) a counteroffer. D) a land contract.

D) a land contract.

Because the seller has promised to sell and the buyer has promised to buy, it is clearly a...

bilateral contract